WIPRO 2019-20 Annual Report Analysis

Mon, 14 Dec

WIPRO has announced its results for the year ended March 2020. Let us have a look at the detailed performance review of the company during FY19-20.

WIPRO Income Statement Analysis

• Operating income during the year rose 4.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 6.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 20.2% in FY20 as against 19.8% in FY19.
• Depreciation charges increased by 7.1% and finance costs decreased by 0.6% YoY, respectively.
• Other income grew by 4.3% YoY.
• Net profit for the year grew by 8.4% YoY.
• Net profit margins during the year grew from 14.7% in FY19 to 15.3% in FY20.

WIPRO Income Statement 2019-20

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Net Sales	Rs m	585,845	610,232	4.2%
Other income	Rs m	26,138	27,250	4.3%
Total Revenues	Rs m	611,983	637,482	4.2%
Gross profit	Rs m	116,126	123,452	6.3%
Depreciation	Rs m	19,467	20,855	7.1%
Interest	Rs m	7,375	7,328	-0.6%
Profit before tax	Rs m	115,422	122,519	6.1%
Tax	Rs m	25,243	24,801	-1.8%
Profit after tax	Rs m	90,179	97,718	8.4%
Gross profit margin	%	19.8	20.2
Effective tax rate	%	21.9	20.2
Net profit margin	%	14.7	15.3

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WIPRO Balance Sheet Analysis

• The company's current liabilities during FY20 stood at Rs 216 billion as compared to Rs 214 billion in FY19, thereby witnessing an increase of 1.0%.
• Long-term debt down at Rs 5 billion as compared to Rs 28 billion during FY19, a fall of 82.9%.
• Current assets fell 9% and stood at Rs 520 billion, while fixed assets rose 22% and stood at Rs 241 billion in FY20.
• Overall, the total assets and liabilities for FY20 stood at Rs 813 billion as against Rs 829 billion during FY19, thereby witnessing a fall of 2%.

WIPRO Balance Sheet as on March 2020

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*	% Change
Networth	Rs m	564,226	553,217	-2.0
Current Liabilities	Rs m	214,350	216,393	1.0
Long-term Debt	Rs m	28,368	4,840	-82.9
Total Liabilities	Rs m	829,248	812,789	-2.0
Current assets	Rs m	571,906	519,851	-9.1
Fixed Assets	Rs m	197,300	240,815	22.1
Total Assets	Rs m	829,248	812,789	-2.0

WIPRO Cash Flow Statement Analysis

• WIPRO's cash flow from operating activities (CFO) during FY20 stood at Rs 101 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY20 stood at Rs 34 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY20 stood at Rs -151 billion on a YoY basis.
• Overall, net cash flows for the company during FY20 stood at Rs -14 billion from the Rs 118 billion net cash flows seen during FY19.

WIPRO Cash Flow Statement 2019-20

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-19	Mar-20
Cash Flow from Operating Activities	Rs m	116,316	100,643	-13.5%
Cash Flow from Investing Activities	Rs m	50,126	34,012	-32.1%
Cash Flow from Financing Activities	Rs m	-49,369	-150,998	-
Net Cash Flow	Rs m	117,599	-14,421	-

Current Valuations for WIPRO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 17.1, an improvement from the EPS of Rs 14.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 347.8, stands at 16.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.4 times, while the price to sales ratio stands at 2.2 times.
• The company's price to cash flow (P/CF) ratio stood at 13.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Sales per share (Unadj.)	Rs	97.1	106.8
TTM Earnings per share	Rs	14.9	17.1
Diluted earnings per share	Rs	19.9	21.6
Price to Cash Flow	x	19.1	13.3
TTM P/E ratio	x	21.6	16.2
Price / Book Value ratio	x	2.6	2.4
Market Cap	Rs m	2,098,303	1,573,576
Dividends per share (Unadj.)	Rs	1.0	1.0

Ratio Analysis for WIPRO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.4x during FY20, from 2.7x during FY19. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 17.7x during FY20, from 16.7x during FY19. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 17.7% during FY20, from 16.0% during FY20. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 23.3% during FY20, from 20.7% during FY19. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 12.9% during FY20, from 11.8% during FY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-19*	12 Mar-20*
Current ratio	x	2.7	2.4
Debtors’ Days	Days	63	62
Interest coverage	x	16.7	17.7
Debt to equity ratio	x	0.1	0.0
Return on assets	%	11.8	12.9
Return on equity	%	16.0	17.7
Return on capital employed	%	20.7	23.3

To see how WIPRO has performed over the last 5 years, please visit here.

WIPRO Share Price Performance

Over the last one year, WIPRO share price has moved up from Rs 243.8 to Rs 347.8, registering a gain of Rs 104.0 or around 42.6%.

Meanwhile, the S&P BSE IT Index is trading at Rs 22,553.7 (down 0.5%). Over the last one year it has moved up from 15,005.8 to 22,553.7, a gain of 7,548 points (up 50.3%).

Overall, the S&P BSE SENSEX is up 14.5% over the year.

(To know more, check out historical annual results for WIPRO and quarterly results for WIPRO)